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How to Prepare for the Buyside Interview? – Corporate Finance/Private Equity Investment Professionals

While still in the midst of the ongoing global Covid-19 pandemic, and the ongoing uncertain global economic environment, it remains an opportune time to self-reflect on your career journey, and how to make the next step.

As a professional who has likely completed a professional accountancy qualification (ACA, CIMA or ACCA) or the Chartered Financial Analyst (CFA) designation, in a transactional or advisory environment, it is often an aspiration among early career professionals to make a move to an investment or buyside position.

So, what does this look like?

Essentially, buyside opportunities exist in environments where there is capital deployment.

In essence, this means that an existing business, investment firm, private equity house, property investment business or similar are making decisions around the acquisition of assets. Assets can include the purchase of:

  • a business to complement and grow/develop existing operations (Corporate Development/In House M&A)
  • Equity investment or leveraged buy-out (LBO) (growth capital or Private Equity)
  • Direct Asset Class Investing, be it equities/fixed income (traditional investment management)
  • Hard Assets, e.g. property/energy (Property Investment/Renewables)
  • Leveraged Loans (credit investing)

This list is not exhaustive, but the commonality is that each investment path involves a decision on whether or not to deploy capital to make an investment.

Why Buyside

The buyside is undoubtedly an interesting and exciting career trajectory. Typically, you will engage with excellent professionals in reputable businesses who are very commercially focused. From day 1, your will have exposure to the end to end transaction lifecycle. For many positions, including P/E and in-house positions, this can extend further to having significant involvement in the acquired asset/business post closing, marrying both transactional and commercial/hands on experience.

It is a dynamic, exciting, highly commercial and potentially very lucrative career journey.

How to get there?

Basically, you need to demonstrate that you can think like an investor.

The Interview

Assuming pre-requisites (the bar is high) of a professional qualification, strong academics (2.1 degree, or better) and a well presented and relevant CV, the interview process for any buyside position is difficult, and requires significant preparation for success. Those that fail to prepare will usually not progress very far.

Here are some suggestions:

  1. The interview
    1. The interview will be challenging. The key piece of advice is to demonstrate that you can think like an investor. Research thoroughly the various acquisitions/investments that the business has made. Establish key investment criteria – and why.
    2. Relate your experience insofar as possible to the business and their investment/acquisition strategy.
    3. Show an interest in the market – have prepared examples of businesses, etc that you think are interesting/relevant.
    4. Have an opinion on a valuation – ultimately, every decision comes to this. Think about your valuation methodology and how you arrive there for different scenarios. Practice this yourself, be comfortable with various industry metrics.
    5. Think commercially – e.g. an interviewer (who is almost always going to be an investor) may ask you about your views on a particular sector (for instance, retail or technology). Be prepared for this eventuality.
    6. Demonstrate energy and enthusiasm – this cannot be overstated – you will be working as part of a small team and will be relied on to deliver – it is important to show that you can get the job done.
  1. The Case Study

If successful at stage one interview, practically all buyside roles will require the completion of a case study. The form and substance will vary from business to business, and it can require a time commitment of a half day through to a week in some instances.

We have put together some pointers from our experience with advising candidates over many years in the table below:

Topic Considerations
Industry –          Understand the company profile and it’s industry – what                   does the business do?

–          What are drivers in the industry?

–          Key risks associated with the sector (e.g. cyclicality)

–          Competition

–          Growth prospects

–          Obsoletion/defensive characteristics

Company –          Market position & competition

–          Growth prospects

–          Revenue profile (stability & concentration)

–          Cost Structure

–          Peer Analysis

–          Management

–          Track Record

–          Market Sentiment

Financial Analysis –          Financial Modelling (future)

–          Financial Analysis (historic)

–          Leverage

–          Liquidity

–          Ability to raise capital

–          Working capital profile

–          Cash flow generation

Due Diligence –          Legals

–          Transaction Structure

–          Liabilities (contingent, contractual, pension, taxes)

Valuation –          Basis for valuation

–          Base/Downside case analysis

–          Fit/Synergistic considerations (if acquiring alongside,                         integrating with another business)

 

What to do next?

While buyside opportunities are by nature limited in a small market like the Irish market there are in any given year several interesting openings. FK International has represented buy side businesses on multiple assignments for over 20 years. We are well positioned to speak to you about this area.

Ger Buckley

Chief Operating Officer

gbuckley@fkinternational.com

https://www.linkedin.com/in/ger-buckley-503621a8/